Korea Investment Management Lists Two ACE ETFs Investing in 30-Year U.S. Treasury Bonds

Korea Investment Trust Management announced on the 11th that it will simultaneously list two exchange-traded funds (ETFs) investing in the US 30-year Treasury bond on the 12th of this month.

The two newly listed products are the ACE US 30-Year Treasury Yen Exposure Active (H) ETF and the ACE US 30-Year Treasury Active ETF. Following last year's listing of the ACE US 30-Year Treasury Futures Leverage (Synthetic H) ETF and the ACE US 30-Year Treasury Active (H) ETF, this year they are adding two more products to strengthen the ACE ETF lineup investing in the US 30-year Treasury bond.

The ACE US 30-Year Treasury Yen Exposure Active (H) ETF is suitable for investors seeking to benefit simultaneously from the rise in US Treasury bond values due to interest rate cuts and the appreciation of the Japanese yen. Its benchmark index is the Bloomberg US Treasury 20+ Year Total Return Index T1530 JPY Currency Hedged Index KRW Converted Index.

According to data compiled by the Korea Securities Depository's SaveRo, the product ranked second in net purchases by overseas stock investors last year was a Japan-listed ETF investing in the US 30-year Treasury bond (ISHARES 20+ YEAR US TREASURY BOND JPY HEDGED ETF, 446.4 million USD). Since this product also ranked fourth in net purchases by overseas stock investors this year (as of the end of February, 174.78 million USD), the ACE US 30-Year Treasury Yen Exposure Active (H) ETF, which allows investment in the US 30-year Treasury bond in yen without currency exchange, is expected to be a good alternative.

The ACE US 30-Year Treasury Active ETF is the unhedged version of the ACE US 30-Year Treasury Active (H) ETF introduced last year. Its benchmark index is the Bloomberg US Treasury 20+ Year Total Return Index KRW Converted Index, which has the advantage of allowing investors to receive both foreign exchange gains and bond interest income when the KRW-USD exchange rate rises in the future.

The two ACE ETFs investing in the US 30-year Treasury bond being listed this time, like the ACE US 30-Year Treasury Active (H) ETF listed last year, are spot-type monthly dividend products. The advantage of the spot-type structure is that the actual burden cost borne by investors, the effective cost, is lower compared to synthetic types. Additionally, since interest income comes from the bonds held in spot, monthly dividend payments are possible without damaging the principal.

Seunghyun Kim, head of ETF consulting at Korea Investment Trust Management, explained, "The ACE US 30-Year Treasury Active (H) ETF attracted much attention after listing, ranking second in net purchases by individual investors among all ETFs last year (309.7 billion KRW). Accordingly, we have further expanded the ACE ETF lineup to meet the segmented investment demands of investors investing in the US 30-year Treasury bond."